9/8/10 Post

BUZZ: Businesses See Benefits of Tax Break as Limited

News
Obama's economic plan: Too little, too late
This week, the Obama administration began outlining additional measures to jumpstart the economy and create jobs. But even if passed, Obama's proposals are too little and too late to reverse the downward trend of economic activity, according to some economists.
State Budget Crises Mount as Medicaid Rolls Soar
Florida and other states faced with soaring Medicaid rolls amid a stubborn recession are struggling to balance their budgets.
Why carmakers aren't coming back anytime soon
With the home stretch in sight, 2010 is shaping up to be a weaker U.S. auto market than predicted, probably closer to 11.5 million new-vehicle deliveries, rather than the 12 million that automakers and forecasters had figured - and hoped - would be sold.
Tax Havens: Offshore Operations Cost U.S. Billions
Companies can save big bucks by shifting operations to offshore locations, a loophole in the U.S. tax code that some lawmakers are seeking to close.
Taxes: What people forget about Reagan
Those who oppose higher taxes and are fed up with record levels of U.S. debt may pine for Ronald Reagan, the patron saint of lower taxes and smaller government.
Obama's jobs pitch fails to dazzle Washington
President Obama's latest round of job-bolstering proposals boasts something for everyone: corporate tax breaks for conservatives and spending on roads and railways for liberals. Yet he's having a hard time getting everyone on board.
Midterm debacle: The blame game begins
Come Nov. 2, one of two big things will happen: Democrats will blow the most complete dominion a party has held over government since the advent of the Reagan revolution. Or Republicans will blow the biggest advantages an out-of-power party has enjoyed since Watergate.
Republicans Slip From Unprecedented Lead to a Tie in Gallup Survey
Democrats and Republicans are now tied in Gallup’s weekly tracking of voter preferences just a week after Republicans took an unprecedented 10-point lead.
Obama Is Against a Compromise on Bush Tax Cuts
President Obama on Wednesday will make clear that he opposes any compromise that would extend the Bush-era tax cuts for the wealthy beyond this year, officials said, adding a populist twist to an election-season economic package that is otherwise designed to entice support from big businesses and their Republican allies.
Boehner Calls for 2-Year Freeze on All Tax Rates
U.S. House of Representatives Republican leader John Boehner called Wednesday for a two-year freeze on all current U.S. tax rates, including Bush-era tax cuts for the rich set to expire at the end of this year.
Harry Reid: "I had nothing to do with" bad economy
Senate Majority Leader Harry Reid, facing a tough re-election bid in one of the states hardest hit by the recession, said today that the economic downturn was not his fault.
BP: Multiple companies, teams contributed to spill
Oil giant BP PLC laid much of the blame for the rig explosion and the massive Gulf of Mexico spill on workers at sea, other companies and a complex series of failures in an internal report released Wednesday before a key piece of evidence has been analyzed.
China Will Be Working On a Railroad For Iran
China is about to sign a $2 billion deal to build a railway line for Iran. This is the first step of a broader railway plan that will connect the Middle East and Central Asia to Beijing.
Future hiring will generate mainly high-skilled or low-paying jobs in service industries
Job creation will likely remain weak for months or even years. But once employers do step up hiring, some economists expect job openings to fall mainly into two categories of roughly equal numbers: Professional fields with higher pay. Think lawyers, research scientists and software engineers and lower-skill and lower-paying jobs, like home health care aides and store clerks.

Blogs
BLS: Job Openings increases in July, Low Labor Turnover
"There were 3.0 million job openings on the last business day of July 2010, the U.S. Bureau of Labor Statistics reported today."
Prices Must Be Free To Tell The Truth
The Keynesian habit of ignoring the causes of depressions and dealing only with the analytically-secondary phenomena of aggregate expenditure is or should be unacceptable among intelligent economists.
Should we let housing prices fall?
Arguably many banks would once again be "under water." Enthusiasm for another set of bailouts is weak, to say the least. Our government would end up nationalizing these banks and it still would be on the hook for their debts. ...Housing prices must fall, yet...housing prices must not fall.
There is Nothing So Permanent as Temporary Stimulus
...CBO has issued another report. This one shows spending as a share of GDP remaining will above its 40-year average for the foreseeable future. Note, however, that they still show spending as a share of GDP declining somewhat in the coming years.
Educational “reform”
...the rest of the problem is the top-down design of curricula, textbooks, and the motivation of teachers in a system that does not reward teaching excellence and does not punish teacher mediocrity.
Secondary Sources: Back to School, State Role, Inequality
A roundup of economic news from around the Web.
Whose fault was it?
Krugman never gives an iota or quark of blame for the crisis on government policies. I guess this comforts the faithful. It does not help his reputation as a truth-seeker.
Visualizing the U.S. Higher Education Bubble
Ultimately, like a housing bubble or a bubble in the stock market, we strongly suspect that today's highly inflated tuition is not something that can be sustained indefinitely.
Crumbling Infrastructure?
Here’s some evidence that America’s transportation infrastructure isn’t “crumbling.”
Some Good News!
Monday’s NY Times actually got some things right.
First, the front page carried A STORY that said it might be good to let the free market prevail in housing!
MBA: Mortgage Purchase Activity increases slightly
"The Refinance Index decreased 3.1 percent from the previous week. The seasonally adjusted Purchase Index increased 6.3 percent from one week earlier."
Paying Third-Graders for Better Test Scores
Efforts to improve education in the U.S. has included financial incentives for high-performing teachers and programs have targeted middle- and high-school students, but a recent study found success in giving money to kids as young as third grade who scored well on standardized tests.
China (Australia) fact of the day
...the Australian dollar [is] the fifth-most-traded currency in the world -- after the U.S. dollar, the yen, the pound, and the euro -- even though Australia is the 18th largest economy.
Kansas City, Dallas Feds Called for Rate Increase
Prior to the Fed’s latest policy-setting meeting Aug. 10, directors of the Federal Reserve Bank of Kansas City and from the Dallas Fed voted to increase the discount rate by a quarter percentage point to 1%.
Very good sentences
“I’m all for reducing the number of public-sector employees,” an I.M.F. investigator had said to me. “But how do you do that if you don’t know how many there are to start with?”
One in Six Americans Receives Government Assistance
Fifty million are on Medicaid, ten million Americans receive unemployment benefits, and 4.4 million get direct cash assistance.
The Founders, Free Markets, and Sound Money
Founders saw little or no role for government in the economy—that they embraced a purely laissez faire economic theory.
Debunking Orszag’s Tax Hike Myths
We have paired some of Orszag’s op-ed statement “myths” with “facts” from JD Foster’s new paper: Obama Tax Hikes Defended by Myths and Straw Man Arguments.
Neglecting Allies and Appeasing Foes
“Since taking office, President Obama has reached out to the Muslim world as a whole, to China, to Turkey and to Iran, but has devoted scant serious diplomatic energy to Europe.”
Why Deflation Never Had a Chance
What the deflationists fail to acknowledge is that in a purely fiat monetary system, deflation is a choice, not an inevitability.
To End Obesity, Start by Dismantling Sugar Quotas
During National Childhood Obesity Awareness Month the White House has the opportunity to change the antiquated, unhealthy sugar quotas and tariffs that foster production of high fructose corn syrup.
America's weirdest government monopoly
One of the more interesting, though perhaps less significant, fault lines between social conservatism and economic conservatism is the peculiar issue of state liquor monopolies. There are nine states in the union where the government maintains a direct monopoly on the sale of hard liquor.

Research, Reports & Studies
Do Intergovernmental Grants Create Ratchets in State and Local Taxes?
Our findings confirm that grants indeed result in future state and local tax increases of roughly 40 cents for every dollar in grant money received in prior years.
Most 'Re-employed' Workers Say They're Overqualified for Their New Job
Workers who suffered a spell of unemployment during Great Recession are, on average, less satisfied with their new jobs than workers who didn't. They are more likely to consider themselves over-qualified for their current position.
India: Fast Growth Does Not Mean a Strong Economy
Indian growth, driven for more than a decade by market reform initiated in 1991, is now being achieved the old fashioned, unsustainable way: through intense fiscal and monetary stimulus. Growth thus stems in part from New Delhi deliberately choosing to risk high inflation.

Economists’ Comments & Opinions
Are rising imports a boon or bane to the economy?
It has become conventional wisdom in reporting on the economy that rising imports and a growing trade deficit are bad signs for growth.
Economic Malpractice
If a medical doctor prescribed a treatment for a patient that only worked in theory, and the patient did not get better, the doctor could rightly be sued for medical malpractice if tried-and-true cures were known. When members of Congress and a president engage in economic malpractice, the patient's (i.e., the American public's) only recourse is to vote them out of office.
In November, it's Democrats vs. Obamacare
When Obamacare finally passed the House, 34 Democrats voted no. Thirty-one of those Democrats are now running for reelection, and, not surprisingly, many of them are highlighting their opposition to the bill.
I, Market Economy
Any healthy civilization, never mind any healthy economy, involves unfathomably vast amounts of harmonious cooperation. According to Hayek, no central planner or bureaucrat could ever have enough knowledge to consistently and successfully guide all of those economic actions in a more efficient manner.
How You, Mr. President, Can Speed the Recovery
Details of the government's failures thus far and innovative suggestions for getting the economy back on track.
The Rules of Economics, Part 1
A look at some of the more important rules, and the consequences for individuals, companies, and countries that break them.
The Rules of Economics, Part 2
There are two ways you can grow your economy: You can either increase your (working-age) population or increase your productivity. That's it.
Obama's New Stimulus Won't Stimulate
Piling on more spending now isn't just unwise policy, it's a form of fiscal insanity.
Time for Emergency Economic Reform
How about a payroll tax holiday, funded by a federal spending, hiring and pay freeze?
Don't dismiss the market economy
We shouldn't forget that the modern market economy is the greatest communal enterprise ever undertaken.
RAHN: Economic malpractice
President's policy has a long history of failure.
The German Miracle: Another Look
Germany has cut government spending and its economy is growing smartly. It's not the first time that market-friendly policies have led the nation out of crisis.
Payroll Tax Doubles in This Republican Dream Plan: Amity Shlaes
Impossible Idea No. 1: Double the payroll tax... Impossible Idea No. 2: Cut the capital-gains rate and the tax on dividends to 5 percent, permanently... Idea No. 3: Make all tax cuts permanent.

Graph of the Day
American Thinker: Unemployment Rate With and Without the Recovery Plan UPDATE
See: Charting jobs & unemployment
See also: Union Members, by Industry
See also: Favorability Ratings of Labor Unions Fall Sharply

Book Excerpts
"The cornerstone of trade unionism is compulsory membership. The workers refuse to work with men who belong to an organization not recognized by themselves. They exclude the non-union men by threatening to strike or, ultimately, by striking. Those who refuse to join the union are sometimes compelled to do so by rough handling. It is not necessary to dilate upon the drastic violation of the liberty of the individual which this implies... No one has seriously contested the destructionist function of trade unionism. There has never yet been a wage-theory from which one could deduce that association by means of trade unions led to a permanent increase in the real income of the workers." –Ludwig von Mises, Socialism: An Economic and Sociological Analysis (1922)

Did You Know
According to a recent survey 75% of likely voters nationwide want Congress to cut its own pay, and 54% believe that most federal workers are overpaid just 24% disagreed and 22% were not sure. The survey results come on the heels of a USA Today analysis of Bureau of Economic Analysis data that revealed that federal workers earned average pay and benefits of $123,049 in 2009, more than twice as much as the $61,051 earned by private workers.

9/7/10 Post

BUZZ: Obama in Infrastructure Push

News
Economy's looking up for now as double-dip fears ease
A steady flow of not-entirely-terrible economic news has eased worries of renewed recession and shifted the political spotlight from the Federal Reserve to the White House.
EU OKs new financial supervision deal
European Union nations agreed to create new financial oversight institutions Tuesday, hoping to prevent a repeat of the government debt crisis that nearly left Greece bankrupt and brought the European banking system to its knees.
Obama assails GOP, promotes new jobs program
A combative President Barack Obama rolled out a long-term jobs program Monday that would exceed $50 billion to rebuild roads, railways and runways, and coupled it with a blunt campaign-season assault on Republicans for causing Americans' hard economic times.
Nation's economic woes jeopardize Dems' prospects
Frustrated, discouraged and just plain mad, a lot of people who have lost jobs - or know someone who has - now want to see the names of Democrats on pink slips. And that's jeopardizing the party's chances in Ohio and all across the country in November's elections.
Ethanol's mid-life crisis
The sugar industry produces food, fuel and environmental benefits. How fast it grows may depend on an argument about how it should be regulated.
Retiring Fed Official Considers More Bank Action
The former vice chairman of the Federal Reserve, who retired last week after 40 years at the central bank, says that the economy is in “a slow slog out of a very deep hole,” and that the Fed should consider additional stimulus unless the recovery shows signs of “decent progress.”
Economy's modest gains met with irreverence
Polls show many people believe the economy is still in recession or getting worse. Most surveys show that people are as upset about the economy now as they were when it was in deep recession more than a year ago. Voters angry about the economy appear ready to boot out another crop of congressional incumbents for the second election in a row.
Once a Dynamo, the Tech Sector Is Slow to Hire
...as the nation struggles to put people back to work, even high-tech companies have been slow to hire, a sign of just how difficult it will be to address persistently high joblessness.
Indian nuke bill seen as bad for business
A bill approved last week by the Indian Parliament that holds suppliers of nuclear reactors and raw materials liable in the event of an accident is raising concerns that it will scare away foreign businesses from India's lucrative energy market.
Unemployment in U.S. May Rise Toward 10% on `Feeble' Growth
The jobless rate in the U.S. is likely to approach 10 percent in coming months as the economy fails to grow quickly enough to employ people rejoining the labor force, according to economists at BofA Merrill Lynch Global Research and Morgan Stanley.
Small Businesses Feel Squeezed by Obama Policies
Tax increases are keeping small business owners from hiring.
Wall Street Needs `Off-the-Charts' September to Rescue Quarter
After two months bankers would like to forget, Wall Street may need a September to remember to avoid closing the books on the worst quarter for investment banking and trading revenue since the peak of the financial crisis.
Obama to introduce another business tax cut
In another move aimed at stabilizing the still-shaky economy, President Barack Obama on Wednesday will introduce a new $200 billion tax cut giving businesses across the country an incentive to buy new equipment in the short term.
Taxpayer Identity Theft Rises 460 percent
The IRS office that advocates for individual taxpayers is receiving more cases than ever and is processing them more slowly, a report finds.
Four unexpected economic bright spots
Good economic news has been hard to come by lately, but not all is doom and gloom in America these days. The end of summer ushered in a few signs of progress in some of the unlikeliest corners of the economy.
81% rate U.S. economy as 'poor'
A new national poll released Sunday indicates that eight in 10 Americans say that the economy is in poor shape, and the number that say conditions are very poor is on the upswing after steady declines through the spring.
Study says that up to a point, money really can improve happiness
Researchers report: People's emotional well-being - happiness - increases along with their income up to about $75,000.
Homeless Outraged That $1 Menu at San Francisco McDonald's Now 50 Cents More
Such price hikes might be met by a grumble and a shrug elsewhere, but in bohemian Haight-Ashbury, street people are up in arms, saying they rely on the dollar deals to survive.
Future hiring will generate mainly high-skilled or low-paying jobs in service industries
Job creation will likely remain weak for months or even years. But once employers do step up hiring, some economists expect job openings to fall mainly into these two categories.
Bush Tax Cuts Showing Some Bipartisan Vigor
The political environment surrounding tax cuts has become almost unthinkable for Democratic leaders and President Obama as Election day approaches.

Blogs
Obama’s New Stimulus Schemes: Same Song, Umpteenth Verse
Like a terrible remake of Groundhog Day, the White House has unveiled yet another so-called stimulus scheme. Actually, they have two new proposals to buy votes with our money.
‘Government Efficiency’
I recently criticized the idea that policymakers should focus their attention on making government more “efficient.” Instead, I argued that policymakers should focus their reform efforts on reducing government’s size.
The Obama Tax and Spend Hikes
26% of voters think the economy is going to be better in the next year, and 61% think the country is on the wrong track.
Not Enough Labor Day
How the government is destroying jobs
Reclaiming Rights
The never-ending struggle to go about your business without fear of government sanction
Labor Day Has Become Government Day
This Labor Day marks a milestone in the history of the U.S. union movement. It is the first Labor Day on which a majority of union members in United States work for the government.
While Unemployment Rises, 15 Minutes to Tee Time
President Obama, who has already tried a massive and massively ineffectual stimulus bill followed by a series of policy gimmicks has announced that, once again, he is focusing intently on the economy.
The Obama Budget: Expanding Welfare, Undermining Marriage
How can the government grow the nation’s welfare roles and undermine efforts to support marriage, in a single effort?
New Study Says Cash for Clunkers Was … a Clunker
Although it’s impossible to know what the economy would have done absent cash-for-clunkers, the authors of the study attempted to do so by analyzing “parts of the U.S. where, for one reason or another, there were almost no clunkers on the road when the program took effect. By comparing sales in those areas to sales in more clunker-rich parts of the country, they were able to estimate the program’s effects.”
Home Equity Lines of Credit: The Next Looming Disaster?
An in-depth look at these second liens and the dangers they pose for the housing market and large banks.
A Small Step in the Right Direction
...businesses would be able to fully and immediately deduct the cost of equipment, rather than having to gradually deduct the cost via depreciation allowances.
Unnecessary ER Visits
People who thought that we could end unnecessary ER visits by expanding access to primary care underestimated the vast reserves of American health paranoia.
How did America pay for World War II?
File under "Reasons why WWII does not provide a good case for massive fiscal stimulus today."
Jobs Surge for the Class of 2010
In fact, young adults between the ages of 20 and 24 enjoyed the greatest increase of all Americans counted as being employed by age group.
War is bad for children, other living things, and the economy
That’s the biggest and most dangerous economic myth of all time, the idea that war stimulates the economy. War stimulates the military sector of the economy.
Duration of Unemployment
In August 2010, the number of unemployed for 27 weeks or more declined significantly to 6.249 million (seasonally adjusted) from 6.752 million in July. It appears the number of long term unemployed has peaked, but it is still very difficult for these people to find a job - and this is a very serious employment issue.
Heterogeneous Labor
Labor, like capital goods, is specialized and specific to certain occupations. When those occupations disappear in recession, the next best alternative immediately available locally may pay considerably lower wages. Workers may “know” they have better alternatives, but their knowledge capital has also depreciated with the crisis and downturn. They must search for employment opportunities.
Broadening Economics Education
Absorbing a broader perspective would encourage tolerance for a variety of methods and a greater appreciation for the complexities of economic policy.
Finding What You're Looking For
One of the things I find most wearying about writing about economics is the extent to which people attempt to hijack economics to "scientifically prove" that their value judgements about things like the proper size and role of government are 100% factually correct--as if there were some way to empirically validate the correct marginal tax rate for people making over $100,000 a year.
Unofficial Problem Bank List increases to 844 institutions
On August 7, 2009, we listed 389 institutions with $276 billion in assets, and now the list has 844 institutions and $412 billion in assets.
Consumption Spending Is 70 Percent of GDP — So What?
...our crying need at present is for a robust revival of private long-term investment. Consumption-oriented government “stimulus” programs, at best, only ensure a protracted period of economic stagnation.
Earthquakes As Economic Phenomena
It will be interesting to see the response of government officials in Christchurch. Official policy response can either slowdown recovery (as it happened in New Orleans in 2005) or it can foster it.
The Medicare Fraud in Our Future
Scam artists get lists of patients, lists of expensive items they can bill to Medicare, and a bank account. Then they go to town and steal tens of millions of dollars.
Schedule for Week of September 5th
This will be a light week for economic data. The trade deficit for July on Thursday is probably the key release.
Temper, Temper…
Tea Partiers aren’t upset because Obamacare hasn’t worked its miracles yet; they’re upset because they believe that Obamacare will create inordinately burdensome costs and other ills in the future. Stimulus opponents aren’t up-in-arms because the economy isn’t “all better” already; they’re up-in-arms because they worry about the high debt burden and inflation that today’s stimulus makes more likely tomorrow.
Unemployment Rate and Level of Education
Note that the unemployment rate increased sharply for all four categories in 2008 and into 2009.
Secondary Sources: Rural Stimulus, Housing, Liability and Risk
A roundup of economic news from around the Web.
Update: Total people receiving unemployment benefits
That is an increase of almost 2 million people receiving aid since the program was reinstated... There are another 4.1 million people receiving regular unemployment benefits (NSA). So the total is close to 10 million (NSA).

Research, Reports & Studies
Cut or be Cut
This collection of eight essays by Reason authors from the Washington Times series “Cut or Be Cut”, illustrates just a small fraction of how “government as usual” is spending your tax dollars.
Heritage Employment Reports: Summer Slowdown of Jobs Continues in August
The unemployment rate increased from 9.5 to 9.6 percent. This was in part because participation in the labor force increased from 64.6 to 64.7 percent as 550,000 workers entered the labor market. The participation rate is unchanged from the start of the year but down 0.5 percent from April.
Obama Tax Hikes Defended by Myths and Straw Man Arguments: Summary
Raising taxes now or in the future is the wrong course. Projected deficits are due to excessive spending, not a dearth of revenues. The arguments for defeating the tax increase are sound. Proponents of raising taxes have offered many straw man arguments and myths to support their case.
RCM: Wells Fargo Economics Group: Weekly Economic & Financial Commentary
U.S. Review: Stability at Low Altitude.


Economists’ Comments & Opinions
'Stimulus' Snake Oil
Those who argue that the US unemployment rate, still stuck at 9.6 percent, is reason to try "a second fiscal stimulus" to raise "aggregate demand," are wrong in many ways.
The Biggest Bubble-Makers
Amid signs that another financial bubble might be in the making — this time involving U.S. Treasury bonds priced at about 100 times their yield — it would be helpful to review what one might call bubble dynamics.
Housing Crisis? Look to Canada for Answers
President Barack Obama has tried to prop up the housing market by helping people stay in their homes, even though they're still overwhelmed with mortgage debt. This is the latest in a long series of government interventions intended to promote homeownership.
Your Fat Paycheck Keeps Neighbors Unemployed
Some observations perfectly at home in economics textbooks can be so beastly in practice that nobody is willing to mention them. Ignoring the facts, though, leads to bad policies, and with the U.S. unemployment rate at a stubborn 9.6 percent, we don't need more of those.
A Speech from the Far Side: What Our Enemies Heard
Obama’s speech from the Far Side…what was really said.
ORSZAG: One Nation, Two Deficits
It would be tough, then, to squeeze more than a half percent of G.D.P. from spending by 2015. Additional revenue — in the range of 0.5 to 1.5 percent of the economy — will therefore be necessary to reduce the deficit to sustainable levels.
Bad Medicine Begets Bad Economy
Government policy mistakes bring on crises; the correction of those mistakes will quickly cure them.
The Obama Economy
How trillions in fiscal and monetary stimulus produced a 1.6% recovery.
Factchecking the Democratic Leadership on Jobs
Economists now attribute a chunk of the decline in the jobless rate to 9.6% versus 10.1% in October ’09 to the 1.4 million people who left labor force since May. Add in 1.4 million people, and the jobless rate zooms higher to 10.3%, says Miller Tabak strategist Dan Greenhaus.
Masking the level of job losses
...331,000 people lost full-time jobs and are now working part-time, not because they want to do so, but rather because their employer had to cut back.
Paranoid About Paranoia
But obsessing about the paranoia of the masses is often a way for American elites to gloss over their own, entirely nonsymbolic failures.
More on Small Businesses and the Administration
It’s really fascinating that in the face of all its previous failures, the administration continues in the same direction.
Washington and the 'Recovery Summer' That Wasn't
The nation's capital endures recessions with less discomfort than anywhere else, and that's truer than ever today.
Will Unemployment Continue to Climb?
A look at the factors that will continue to depress employment and indicate weak economic growth.
Now the Bad News: Those August Jobs Were Rented
Despite what some on Wall Street say, the August jobs report shows little hope for recovery.

Graph of the Day
Mercatus Center: Job Creation Update
See: When the GOP Wrote Federal Budgets
See also: Government Spending as a Share of Gross Domestic Product
PODCAST: Kling on Knowledge, Power, and Unchecked and Unbalanced

Book Excerpts
"A major problem of our time is that people have come to expect policies to produce results that they are incapable of producing. …we economists in recent years have done vast harm—to society at large and to our profession in particular—by claiming more than we can deliver. We have thereby encouraged politicians to make extravagant promises, inculcate unrealistic expectations in the public at large, and promote discontent with reasonably
satisfactory results because they fall short of the economists’ promised land." –Milton Friedman, “Have Monetary Policies Failed?” (1972)

Did You Know
Only 47.6% of people ages 16 to 24 had jobs in August, the lowest level since the government began keeping track in 1948, according to the Labor Department. By comparison, 62.8% of that age group was employed in August 2000.

9/3/10 Post

BUZZ: Unemployment Rate Rises to 9.6%

News
'Recovery Summer' Ends With Economic Pothole
This was supposed to be the season the economy heated up, thanks to a wave of public works projects, funded by the government's stimulus program. But summer is coming to an end, and the recovery has not taken root.
White House considering emergency economic stimuli
Administration officials have been huddling almost continuously during the past week, brainstorming for ideas that would boost employment without hiking the massive federal deficit – with Treasury Secretary Tim Geithner rushing to the West Wing for further consultations late Thursday.
A slight reprieve?
Extending the cuts for a while may turn out to be prudent policy.
Wheat Rises on Russian Export Ban; Mozambique Riots
Wheat rose in Chicago after Russia, the world’s third-largest grower, extended a ban on grain exports into next year, raising the prospect of higher food prices that already have sparked riots in Mozambique.
Bernanke out of moves, critics say
With interest rates near zero and the Federal Reserve already owning a large share of the mortgage and Treasury securities markets, many investors fear the central bank may be out of ammunition should the economy take a serious turn for the worse.
GAO: State, local governments 'will steadily decline'
"... closing the fiscal gap over the next 50 years would require action to be taken today and maintained for each and every year going forward equivalent to a 12.3 percent reduction in state and local government current expenditures. Closing the fiscal gap through revenue increases would require action of a similar magnitude ...."
Obama loses backing on taxes
Defying President Obama, Congress seems increasingly reluctant to let taxes go up, even on wealthier Americans.
Jobs Suspense Keeps Dollar Down
The dollar declined modestly against the euro and yen Thursday, with investors unwilling to stake out new positions ahead of the August U.S. employment report.
Bernanke: Shut down banks if they threaten system
Federal Reserve Chairman Ben Bernanke told a panel investigating the financial crisis that regulators must be ready to shutter the largest institutions if they threaten to bring down the financial system.
July factory orders edge up as strong demand for aircraft offsets weakness in other sectors
Factory orders edged up 0.1 percent in July, the first increase after two months of declines. But the strength came in the volatile transportation sector. Excluding transportation, orders were down 1.5 percent, the biggest drop in this category in 16 months.
Budget Woes: Lessons for Washington from California
California’s budget mess has lessons for Washington: Move fast to slow the growth of government pensions, and broaden the tax base.
Struggling youth crime prevention groups see salvation
A $1.6 billion congressional bailout of sorts could help financially flailing groups that fight to keep young people out of trouble, yet lawmakers are reluctant to take up the expensive proposal amid a sour economy and other, more pressing issues.
President Obama versus the world on jobs
For a president elected on a promise of showing a kinder American face to the world, Barack Obama doesn’t seem to mind throwing a few elbows at allies and rivals alike when it comes to the economy.
Democrats Retreat from Increasing Taxes on the Rich
Worried about the fragile economy and their own upcoming elections, a growing number of Democrats are joining the rock-solid Republican opposition to President Barack Obama's plans to let some of the Bush administration's tax cuts expire.
Few options for Barack Obama on 9/11
The White House has not yet announced the president’s plans for next week, though a source familiar with the matter was doubtful Obama would travel to New York.
Chamber Urges Extension of Bush Tax Cuts
The U.S Chamber of Commerce called for an extension of the Bush tax cuts at its annual Labor Day briefing.

Blogs
Broader U-6 Jobless Rate up to 16.7%: Why the Jump?
The U.S. jobless rate rose to 9.6% in August, but the government’s broader measure of unemployment rose even more to 16.7%, the highest rate since April.
Employment-Population Ratio, Part Time Workers, Unemployed over 26 Weeks
The Employment-Population ratio increased to 58.5% in August from 58.4% in July.
Relief in the Temp Sector
The temporary-help services sector added 16,800 jobs in August, the government said Friday.
Take This Job and Love It
"Employed workers are less fearful of losing their jobs than they were last year, but worries about cuts in benefits and work hours loom larger this year."
Greece: Default Probabilities before and after policy response
...now - after further analysis - the default probabilities have increased for longer time frames...
Lessons in Crony Capitalism
The United States is exploiting our economic system around the world!
The Audacity of Failure
By every objective measure, President Barack Obama’s economic stimulus package has been a complete failure. According to the latest jobs report, total U.S. employment stood at 130.3 million in August, which means the cumulative Obama jobs deficit stands at 7.5 million.
The Repeal Windfall
As November approaches, Obamacare’s defenders are quite plainly desperate. They see public opinion solidly against them, and a devastating election fast approaching.
U.N. Throws $290 Million Lifeline to North Korean Regime
North Korea can count on at least one ally. As reported by FoxNews, “the United Nations is laying plans to spend more than $290 million on a welter of programs in the communist state.” The chief U.N. organizations involved in this effort are: United Nations Development Program (UNDP), UNICEF, the World Food Program (WFP) and the World Health Organization (WHO).
Social Security: Waving the Bloody Shirt Will Delay Needed Reform
Now, it’s liberals who are “waving the bloody shirt,” this time through wild exaggerations of conservatives’ plans for Social Security reform.
How Burger King Lost Its Crown
The fast food chain, which has never been able to fully compete with McDonald's, was sold to 3G Capital for $3.26 billion
Second Gulf Explosion Doesn’t Take Away Need for Drilling
What exploded was not a drilling rig but a production platform. AP reports that the shallow-water platform was not producing oil at the time of the explosion, although the well does normally produce approximately 58,800 gallons of oil and 900,000 cubic feet of gas per day.
Important Manufacturing Indicators Look Weak
Recently released data indicate prolonged economic weakness and a continuing decline in factory orders and the build-up of inventories.

Research, Reports & Studies
Most 'Re-employed' Workers Say They're Overqualified for Their New Job
An estimated 26% (or 36 million) of the 139 million currently employed workers in the United States suffered at least one spell of unemployment during the Great Recession that began in December, 2007.
Are Economists Human?
...analyzes the apparent inability of professional economists to give a better than chance response to a very elementary question about consumer surplus.
Indian Planning and Development Economics
The growth of the Indian economy under Nehru‘s socialism, as we will see, was disappointing. More vigorous growth awaited the liberalization of the economy that began in the 1980s.
The New Face of the Union Movement: Government Employees
The American union movement has reached a historic milestone—more union members currently work for the government than for private businesses.

Economists’ Comments & Opinions
The Small Business The 97% Fallacy
The president's plan to raise top marginal rates is holding back the very people who should be leading the economic recovery.
It Isn't Just Lost Jobs—It's the Lost Jobs Machine
The American economy hasn't been a very robust jobs-producer for quite a while. That's the broader question that needs to be discussed, even as we work on the immediate problem.
120 Days to Go Until the Largest Tax Hikes in History
In just 120 days, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011.
Cantor: Beware of the Obama tax increases
Listening to the Democrats this summer, you're unlikely to hear about an impending tax increase.
Should US government debt be rated junk?
The federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall.
Global Economy's Second Day of Reckoning
On the second anniversary of the Lehman crisis, the world economy finds itself yet again at a very troubling juncture.

Graph of the Day
August jobs report
See: Employment Rate Cause for Alarm
See: Monetary Illusions
See: 45% - Unemployment Ain't All Bad
See Also: U.S. Underemployment at 18.6% in August

Book Excerpts
"In the 1962 Report of the Council of Economic Advisers, full employment was officially defined to be present when there was a 4-percent measured rate of unemployment. This was, however, taken to be only some interim rate, with the long-run objective rate considerably lower. The much-discussed Humphrey-Hawkins bill in 1976 set out a 3-percent target rate, to be attained within four years. Historically, however, unemployment in the United States has only infrequently, and then only temporarily, fallen below 4 percent. During the sixty-three-year period after the creation of the Federal Reserve System, the period 1913-1975, there were only twenty years in which unemployment averaged 4 percent or less. Ten of these years—1918, 1943-1945, 1951-1953, and 1966-1968—occurred during periods when the United States was at war, although the mobilization was not so intense in the latter two periods as it was in the former two. The normal rate of unemployment, though unmeasurable, would appear to lie somewhat above 4 percent. During the fifteen-year period 1946-1960, a period that included both moderate mobilization and moderate recession, as well as predating the full Keynesian conversion of our politicians, unemployment averaged 4.5 percent. Even if we could make the heroic assumption that the institutional-structural features affecting employment have remained invariant over the long periods noted, it would seem clear that the "normal" rate of unemployment lies considerably above 4 percent. And, of course, it would be illegitimate to make such an assumption of invariance through time. Both demographic shifts within the labor force (toward younger and female workers) and policy changes (unemployment compensation, extended minimum wage coverage, increases in welfare payments and retirement support) have had the effect of increasing the level of unemployment that would be consistent with any specified rate of inflation." –James M. Buchanan and Richard E. Wagner, Democracy in Deficit: The Political Legacy of Lord Keynes (1977)

Did You Know
Americans will take to the roads and skies for the Labor Day holiday in greater numbers than a year ago, thanks to low gas prices and pent-up demand for air travel, experts say. Auto club AAA projects a 10% increase in holiday travelers over last year. About 34.4 million people are likely to take trips of at least 50 miles.

9/2/10 Post

BUZZ: Summer of Economic Discontent

News
Small business owners to Fed: 'Get out of our way'
Some polls out this week tell us that small business owners are becoming more cautious.
Factory Growth Buoys Markets
The Institute for Supply Management, which surveys U.S. purchasing managers, said Wednesday its manufacturing index rose to 56.3 in August from 55.5 the prior month.
Boxer, Fiorina debate: California economy is center stage
Sen. Barbara Boxer and GOP challenger Carly Fiorina faced off Wednesday night, drawing sharp distinctions between them.
Economy Avoids Recession Relapse as Data Can't Get Much Worse
The U.S. economy is so bad that the chance of avoiding a double dip back into recession may actually be pretty good.
Condolences to the currency professionals
Currency markets appear vibrant, but don't trust the illusion: this is their last gasp.
With Jobs in U.S. Scarce, Illegal Immigration Slides
The influx of illegal immigrants plunged to an estimated 300,000 annually between March 2007 and 2009, from 850,000 a year between March 2000 and March 2005, according to new study released Wednesday by the Pew Hispanic Center, a nonpartisan research group.
The summer the recovery went missing
The Fed has used every tool at its disposal, but can't jump-start the stalled economy.
Low interest rates squeezing pension funds
Thanks to stock market gyrations and the lowest interest rates in 60 years, millions of Americans are struggling to keep their retirement savings intact and secure their future.
Productivity falls in the spring by largest amount in nearly 4 years while labor costs rise
Productivity in the spring fell by the largest amount in nearly four years while labor costs rose, signals that companies may have reached the limits of squeezing more work out of fewer workers.
Top Obama adviser wants more stimulus spending
President Obama's top economist, in her final speech before stepping down Friday, urged Congress to "find the will and wisdom" to spend more money to create jobs — even though lawmakers' appetite for new government spending has waned ahead of November's elections.
Bernanke Meets Buffett in Role Conceived to Protect Markets
In November 2009, Senate Banking Committee Chairman Christopher Dodd advanced a radical proposal: to create a super-regulator that would take over most of the bank supervision that had been done by the Federal Reserve System, the Federal Deposit Insurance Corp. and other agencies.
Bernanke: Shut down banks if they threaten system
Federal Reserve Chairman Ben Bernanke told a panel investigating the financial crisis that regulators must be ready to shutter the largest institutions if they threaten to bring down the financial system.
Outsourcers warn US producing too few engineers
US universities are producing too few engineers to meet industry demand, Indian outsourcing companies say, leaving such businesses little choice but to hire foreign skilled workers to fill jobs in America.
Unemployment claims drop for second straight week
The number of people requesting unemployment benefits declined for the second straight week, suggesting that the slowing economy isn't prompting widespread job cuts.
Corporate cards for consumers?
Sen. Charles Schumer, D-N.Y., is worried that credit card issuers are making it too easy for consumers to get corporate cards, which are exempt from tougher new laws.
Americans in the dark about energy use
Americans aren't known for their energy-thrift ways. Maybe that's because they have little idea as to how much energy things use.
IMF Warns Countries of Debt Risks, Dismisses Idea of Greek Default
According to the IMF analysis of 23 wealthy countries, Greece, Iceland, Italy, Portugal and Japan are very close to that point, while Ireland, the U.S., Britain and Spain are moving into dangerous territory.
Good grades for back to school sales
Retailers reported surprisingly strong August same-store sales as many consumers braved scorching summer temperatures to bag juicy discounts on school-related products.
Cash-strapped schools turn to volunteers to fill budget gaps
As state and local funding for education dries up, schools around the nation are asking their communities to help them maintain their services and programming.
U.S. Auto Sales Dive in August
Auto sales, once a bright spot in the economic recovery, grew fainter last month. Buyers who are nervous about the economy's health stayed away from showrooms, a worrisome sign since August is typically a strong month.
Bernanke, Bair presenting views of crisis, 'too big to fail' to inquiry panel
Productivity in the spring fell by the largest amount in nearly four years while labor costs rose. Productivity dropped at an annual rate of 1.8 percent in the April-to-June quarter, double the 0.9 percent decline originally reported a month ago.
Ben Bernanke defends bailout
Federal Reserve Chairman Ben Bernanke says the 2008 bank bailout worked, reiterating a long-held contention that federal action averted a much greater crisis for the U.S. economy.
Burger King to be bought
Burger King said Thursday that it has agreed to be acquired by investment firm 3G Capital in a deal valued at $4 billion.
Harrisburg, Pa., defaulting on its bonds
The capital city Pennsylvania is broke and will be skipping this month's multi-million dollar bond payment.
Family insurance costs skyrocket 14%
The spike comes even as premiums for family coverage rose only 3%. This discrepancy is a result of cost-conscious companies shifting more of the insurance burden onto employees.

Blogs
Why a civil society extends unemployment benefits
Do unemployment benefits encourage the jobless to stay jobless? If we got rid of lifeguards and let more swimmers drown, fewer people would venture into the water.
What’s Behind the Decline in Illegal Immigration? It’s the Economy, Stupid
A Pew Hispanic Center report released today confirms what has been widely known, that the number of illegal immigrants in the United States has dropped sharply since 2007. The real argument is over what’s behind the decline.
More Arguments against a Value-Added Tax
The biggest threat to fiscal responsibility is a value added tax.
CBO analysis confuses 'assumption' with 'conclusion'
Did Obama's stimulus actually stimulate the economy? The CBO analysis saying so actually used a model that with that assumption built in.
Business Start-Ups Creating Job
Half of the startups go out of business within five years; but overall they are still the ones that lead the charge in employment creation.
Do You Wish You Could Choose Your Child’s Teacher?
As important as this their influence is, most Americans have no say in choosing their child’s teacher. Parents don’t have a choice when it comes to their child’s education, despite the fact their tax dollars pay for the public schools, and their children’s futures are at stake.
The Medicare Bureaucracy: Ready To Disrupt Seniors’ Drug Coverage
Despite all the promises, a new report from Avalere Health shows that, in addition to the upheaval caused by Obamacare, the Medicare bureaucracy is taking administrative steps to change the Medicare drug program that will have adverse impact on seniors’ choices.
EPA’s New Rating System Encourages Poor Decisions
The EPA recently proposed a new grading requirement for new car stickers. The A–D grading system would rank cars according to their fuel efficiency and carbon dioxide emissions to help consumers make better choices.
The Grades Are In: Only 2% of Colleges get an “A”
Of the 719 colleges and universities analyzed in this report, only 16 institutions of higher education provide a coherent, content-rich general education or core curriculum.
Secondary Sources: Climate Change, Home Ownership, Jobs
A roundup of economic news from around the Web.
Unchecked and Unbalanced Watch
The problem with the whig-history story is that it assumes that government takes care of the problem that it is supposed to solve. But it might not. It might be the case that individuals or small organizations solve the problem better.
The New Normal for Jobless Claims?
The problem is that the number of new unemployment claims is becoming flat at a level far higher than the average 318,000 level that was typical during the full-employment, low-unemployment years of 2006 and 2007.
The Small Schools Myth
The problem is that because small school don't have a lot of students, scores are much more variable. If for random reasons a few geniuses happen to enroll one year in a small school scores jump up and if a few extra dullards enroll the next year scores fall.
The Great Micro Turbulence Amidst the Great Macro Moderation
"The main thing that concerns me is the threat of persistent high unemployment, and here the European experience of the last three decades fills me with dread."
Lawrence Lindsey Vs. Christy Romer
...I get the impression that serving as a policy adviser for an Administration tends to undermine one's ability to be objective. Advisers seem to get inordinately attached and committed to the policies they work on. Herbert Stein was a notable exception.
Progress
So [the Apple nano] is cheaper (even without accounting for inflation), weighs 1/15th as much, and holds about 40 times more music of higher quality [than the 1979 Sony Walkman].

Research, Reports & Studies
Reforming Indigent Defense: How Free Market Principles Can Help to Fix a Broken System
Public defender offices around the country face crushing caseloads that necessarily compromise the quality of the legal representation they provide. The inadequacy of existing methods for serving the indigent is widely acknowledged, and President Obama has recently taken steps to give the problem a higher priority on the national agenda.
RCM: Wells Fargo Economics Group: ISM: Growth Steady with a Positive Surprise: Orders, Jobs OK
August ISM rose to 56.3, which was better than expected. Production and employment showed gains, while
orders moderated. Firms appear to have adjusted their operations to match a slower growing economy.
The Postwar German “Wonder Economy” and Ordoliberalism
The Ordoliberals focused on finding appropriate “rules of the game” for the market order, asking: what constitutional structure and legal framework best preserves a free society and economy?

Economists’ Comments & Opinions
A "Recovery In Name Only"
To the eight million Americans who have lost their jobs during the “Great Recession,” the so-called recovery our nation is currently experiencing hasn’t been very “stimulating.”
Out of the Frying Pan and Into the Fire?
It seems the only uniformity is the trend for panic buying days and panic selling days to go tit for tat. So does that mean Friday will give us another panic selling day?
Fact, Fiction, Fantasy and Foolishness
And it is apparent to all, except for the academics that populate the Obama administration and the Federal Reserve Board that low interest rates, free money, ongoing bailouts and obeisance to political constituencies solve nothing.
Deficits and the War
Now, I am interested to hear how the president, who claimed yesterday that it’s “time to turn the page” and end “the American combat mission in Iraq,” will account in the budget for the 50,000 troops who will still be in Iraq and for the number of security contractors, which is supposed to double over the next few months.
Why Saving Is Right and Economists Are Wrong
Consumer spending is not the way to recovery, and to understand why, we must ask ourselves why we continue to have boom and bust cycles.
Why America Isn’t Working
The honest answer – but one that few voters want to hear – is that there is no magic bullet. It took more than a decade to dig today’s hole, and climbing out of it will take a while, too.

Graph of the Day
Auto sales: Worst August since 1983
See: Population Growth Rates in Selected Countries

Book Excerpts
"One would think that with at least 250 sovereign external default episodes during 1800-2009 and a least 68 cases of default on domestic public debt, it would be relatively straightforward to find a comprehensive long-range time series on public sector debt. Yet this is not the case; far from it. Government debt is among the most elusive of economic time series." –Carmen M. Reinhart and Kenneth S. Rogoff, This Time Is Different (2009)

Did You Know
Health care spending this year has grown at its slowest rate in a half-century, a sign that people are forgoing medical care during the recession. Spending on doctors, hospitals, drugs and other medical care climbed at a 2.7% annual rate per person in the first half of 2010, the smallest increase since the Bureau of Economic Analysis began tracking medical care in 1959. When inflation is taken into account, spending per person actually fell 0.2% in the first six months of the year. That's the first decline since the government began adjusting for inflation in 1995.

9/1/10 Post

BUZZ: Private Sector Cuts Jobs

News
Dow Logs Worst August in 9 Years
Stocks limped to their worst August since 2001, battered by a wave of discouraging data that cast doubt on the faltering economic recovery.
Obama to loosen export control policies; could benefit defense companies
In a bid to tighten national security, U.S. President Barack Obama announced a restructuring of export control policies that would prune one-third of the items in the current control list.
Banks post strong quarter, but woes persist
Aggregate earnings grow, as does 'problem' list.
Fed Divided on Move to Buy U.S. Debt
The minutes, released Tuesday, revealed that Fed officials were divided on how effective the purchase of long-term Treasuries would be, and on whether it would complicate an eventual return to normal monetary policy.
Pakistani says floods slow growth, raise inflation
Pakistan's economic growth will plunge 2 percentage points because of the floods and lead to "massive" job losses, the prime minister warned Wednesday in a speech that predicted a grim couple of years for the already fragile country.
California Cities: D Is for Disincorporate
City officials in Half Moon Bay say the municipal budget is such a mess that it may make sense to disincorporate and turn the place over to San Mateo County.
Obama, GOP debate small-business tax
Both sides claim to be championing jobs growth.
Home Prices Rise; Outlook Dims
Potential Buyers Hesitate; 'Bunch of People Who Are Sitting, Waiting in the Wings.'
Taxing the Rich: White House in Favor of Increases
White House economics aide Jason Furman reaffirmed the White House stand in favor of extending Bush era tax cuts to all but the wealthiest Americans.
Guess who wants a carbon tax?
If Republican leaders were serious about using the Gulf oil spill as an opportunity to put the nation on a sane energy course, they'd pull out a little-noticed bill sponsored by Arizona's Jeff Flake and South Carolina's Bob Inglis and plop it atop their 2010 campaign book.
Are Americans de-banking?
The financial crisis that destroyed some of the world's biggest banks and sent others to the brink of failure have changed Americans' idea of lending and borrowing.
Fed minutes show debate on economic outlook
The Federal Reserve is the last line of defense against a weakening economy, but there has been sharp disagreement among members over what action the central bank should take.
China manufacturing could help avoid 'hard landing'
China's manufacturing sector rebounded in August, calming some fears about the pace of that country's growth.
Jobs: 'Stopped firing, not yet hiring'
The jobs picture still looks sour, but there could be light at the end of the tunnel.
Retail data: Americans spent a bit more this August than last, but back-to-school numbers weak
The good news is for consumers: Those who hoped for prices to fall and held off spending may be in luck if stores deepen discounts further to get rid of fall merchandise.

Blogs
The Press Isn’t Talking Us Into a Recession
Whatever the cause of the upward turn in the indicator’s tone, the result is the same: the U.S. press isn’t talking down the economy.
Broken Banks, Durable Delusions
This year 118 banks already failed and were taken over by the FDIC. At this rate, more banks will fail in 2010 than in 2009.
Secondary Sources: Saving Surprise, Leading Indicators, Tax Cuts
A roundup of economic news from around the Web.
Time to Make Hard Choices on the Budget
[Democrats] seem to plan on "paying" for seventeen different programs with the same pot of money. For example, it now appears to be administration policy to claim that health care reform has extended the solvency of Medicare, and has also reduced the budget deficit, which the CBO has said isn't true.
A simple parable of price stickiness and international externalities
Overall, the results may depend on whether wage rigidity is real or nominal in each currency, the degree of capital mobility, the currency of invoicing in which sticky prices are set, and how much market participants look forward and consider stocks in addition to flows... There are many permutations, to the point where they are perhaps no longer very useful.
Whack-a-Mole
As Robert Higgs notes, "Real civilian consumption and private investment both fell after 1941, and they did not recover fully until 1946. The privately owned capital stock actually shrank during the war."
MBA: Purchase Application activity suggests low level of existing home sales in August and September
"Refinance Index increased 2.8 percent from the previous week and is at its highest level since May 1, 2009."
The Best and the Brightest
Academic explorations of health care policy often suffer from several handicaps, handicaps that are exacerbated by ideological conformity.
How to fix unemployment
Monetary or fiscal stimulus just needs to give the economy a good kick in the pants to prop up demand and get firms to start hiring again. This can be expensive, especially if some of that new momentum finds itself overseas, but may be worth the cost if it can get people back to work.
The Obama Doctrine
There was nothing particularly noteworthy about President Barack Obama’s Oval Office address on Iraq last night. Again he evinced the impression that he viewed Iraq as a distraction. As forgettable as the address was however, once placed into the broader context of foreign policy speeches and actions, a clear Obama Doctrine can now be defined.
What Are America’s Interests?
It is not clear what the President meant when he said, “Ending the war was in our interest.”
Missed Opportunities in the Oval Office
Unfortunately, President Obama missed a valuable opportunity tonight to demonstrate that he is fully committed to success in Afghanistan. Instead he stubbornly reiterated his July 2011 withdrawal date.
The Sky (Still) Isn’t Falling
Deficit-spending U.S. politicians are more than happy to borrow money from China and elsewhere. It’s our own politicians and their reckless spending that Americans need to get tough with.
More Evidence against the VAT
Proponents argue that a new tax on consumption would raise the needed revenues to close the deficit gap. However, rather than putting Washington’s fiscal house back in order, a VAT is more likely to grow the size of government and encourage growth in spending.
The Justice Department Strikes Arizona Again
Eric Holder’s Justice Department really seems to believe that its primary responsibility is to help aliens who violate federal law as opposed to tax-paying citizens of the United States.
The "Us" Vs. "Them" Depression
Will acceptance of the financial malaise create a window of opportunity?
Auto Sales Fuel Consumer Spending
Competitive discounts, rebates, and financing rates helped manufacturers sell cars at an annual rate of 11.6 million in July, compared with 11.2 million in June.
The Misinterpretation of Economic Data
Many have been hailing recent housing data, but these small victories are still far from a comeback.
Why Saving Is Right and Economists Are Wrong
Consumer spending is not the way to recovery, and to understand why, we must ask ourselves why we continue to have boom and bust cycles.

Research, Reports & Studies
The Mont Pelerin Society and the Rebirth of Smithian Economics
Spontaneous-order economic theories, as developed by Smith, Menger, and Hayek, imply that mutually beneficial trades in decentralized markets, and the institutional patterns that grow from them, help to satisfy people’s aims. It promotes the wealth of nations.
Keys to Sustainable Recovery
With economic growth lower than expected, policymakers should undertake measures with a higher probability of stimulating the economy.
Should the Government Expand Telework?
Telework faces a variety of barriers, from a reluctant institutional culture to unfavorable tax laws. The government should take simple steps to lower or eliminate these barriers, saving taxpayers’ money and paving the way for a more nimble workforce.
Defining the Obama Doctrine, Its Pitfalls, and How to Avoid Them
Examining President Obama’s doctrinal statements and actions more closely demonstrates why reasserting American leadership on behalf of liberty would be the wiser course.
Reforming Indigent Defense: How Free Market Principles Can Help to Fix a Broken System
The inadequacy of existing methods or serving the indigent is widely acknowledged, and President Obama has recently taken steps to give the problem a higher priority on the national agenda,
Statistics of Income Studies of International Income and Taxes
The Statistics of Income Division of the IRS conducts 15 studies of international income and taxes. These studies provide data on the foreign activity of U.S. persons, as well as the U.S. activity of foreign persons.

Economists’ Comments & Opinions
Obama's wandering economic message
...Obama's tax increase on the rich would be used to reduce the deficit, resulting in a net contraction of economic activity. Tax increases to pay for past spending do not stimulate the economy.
America's entrepreneurial flame is fading
With each step toward socialism in our economic policy, America's defining entrepreneurial flame fades a bit more in our culture.
Entrepreneurs Know What Obama Doesn't
Entrepreneurship is neither created nor nurtured by government, nor reserved to the privileged; it springs from individuals and can be found even in the poorest communities in countries worldwide.
Dear Patients: Vote to Repeal ObamaCare
Don't believe Democrats who promise to fix the bill once they're re-elected.
The fatal flaw of Keynesian stimulus
Last week, the Congressional Budget Office released a report claiming that the $814 billion "stimulus" has added 3.4 million net jobs. This surely comes as a surprise to the 3.5 million Americans who have lost their jobs and remained unemployed since the stimulus was enacted in February 2009.
Beware Those Who Think the Worst Is Past
We have analysed data on numerous severe economic dislocations over the past three-quarters of a century. The result is a bracing warning that the future is likely to bring only hard choices.
Hands off Social Security
The White House deficit commission is reportedly considering deep benefit cuts for Social Security, including a steep rise in the retirement age. We cannot let that happen.

Graph of the Day
Problem Bank List Climbs to 829
See: Currency Trading Soars

Book Excerpts
"Mises's concept of human action embodies an insight about man that is entirely lacking in a world of Robbinsian economizers. This insight recognizes that men are not only calculating agents but are also alert to opportunities. Robbinsian theory only applies after a person is confronted with opportunities; for it does not explain how that person learns about opportunities in the first place. Misesian theory of human action conceives of the individual as having his eyes and ears open to opportunities that are "just around the corner." He is alert, waiting, continually receptive to something that may turn up. And when the prevailing price does not clear the market, market participants realize they should revise their estimates of prices bid or asked in order to avoid repeated disappointment. This alertness is the entrepreneurial element in human action, a concept lacking in analysis carried out in exclusively Robbinsian terms. At the same time that it transforms allocative decision making into a realistic view of human action, entrepreneurship converts the theory of market equilibrium into a theory of market process. " –Israel M. Kirzner, The Foundations of Modern Austrian Economics: Part 3, Essay 1, "Equilibrium versus Market Process" (1976)

Did You Know
Michigan ends summer without state fair for 1st time in 160 years. The Michigan State Fair had been a state tradition for 160 years and held at Eight Mile and Woodward, within Detroit city limits, since 1905. But the fair had been running deficits and needed $360,000 from the state in 2008 to cover losses. Fewer than 220,000 people passed through last year. At its peak in 1966, the fair drew 1 million.